Friday, January 3, 2014

Billing Dept.: FairPoint wants bigger subsidies, from all Mainers

Published in the Portland Phoenix

Still struggling merely to provide the lowest quality landline telephone service in Maine, FairPoint Communications has now picked a fight with its competitors in the telecommunications industry by asking state regulators to charge non-FairPoint phone customers in Maine as much as $5 per month each to keep the company afloat — even if those people don’t use landlines at all.
FairPoint has always been up against a wall, since it highly leveraged itself to buy the assets of Verizon’s Northern New England operations in 2008, a deal only approved by regulators in Maine, New Hampshire, and Vermont because of the company’s promises to invest in expanding high-speed Internet connectivity and hiring skilled workers to support its services. (See “A Bad Idea Triumphs,” by Jeff Inglis, February 29, 2008.)
Well before the deal was approved, the Portland Phoenix revealed that the company planned to lay off four percent of workers every year, including some who had been recently hired; see “No Raises — It Gets Better,” by Jeff Inglis, November 20, 2007.)
After the deal was closed, the transition from Verizon to FairPoint was repeatedly delayed and rife with problems, including multiple failures to connect an unknown number of 9-1-1 calls to emergency services workers. (See “We Told You So,” by Jeff Inglis, July 4, 2008.)
And then in 2010, FairPoint declared bankruptcy. While under protection of a federal court, it strong-armed state regulators into granting permission to slow the Internet rollout. (See “FairPoint’s Struggles Continue,” by Jeff Inglis, September 3, 2010.)
This latest request, though, is the first to ask for financial support from those beyond its actual customer base — including tens of thousands of Mainers who do not use FairPoint’s services at all.
In June, FairPoint claimed that its so-called “service of last resort” (phone service where no other option is available) costs too much to provide to customers without additional help, and asked the Maine Public Utilities Commission for permission to raise prices $2 per month on its customers, and also for millions from the state’s Universal Service Fund, which is supported by all telecommunications customers, including cellular and cable subscribers.
The state’s USF collection now totals $7.8 million a year, according to William Black, deputy at the Office of the Public Advocate, which represents the people of Maine in utilities-regulation proceedings. FairPoint’s request would mean the fund would need to collect $67 million more, all from surcharges to customers — most of whom do not use FairPoint, and many of whom have actually transferred away from FairPoint in search of better service.
State service-quality reports show that FairPoint (including its subsidiaries) is worst at missing appointments among all telephone companies in the state, has the longest average delay as a result of missed appointments, and has the second-highest average of problems not being solved within 24 hours (behind tiny Island Telephone Company, based in Warren).
Jeff Nevins, FairPoint’s spokesman in Maine, did not return calls, and so was unable to answer questions about whether service would improve as a result of the requested investment, nor why people who left FairPoint should be asked to improve the company’s service to its remaining customers.
Wayne Jortner, senior counsel at the Office of the Public Advocate, says usually a company in FairPoint’s circumstances would ask for an increase in customer rates; he says FairPoint hasn’t done so for fear higher prices would drive away even more customers. That’s what has led to the company’s request to use USF money — spreading the cost across all Mainers with telephones.
The dispute has intensified in November and December, with the five major cellular companies (AT&T, Verizon, T-Mobile, Sprint, and US Cellular) filing objections to FairPoint’s request with the PUC, as has TimeWarner Cable, which also operates a telephone service over its cable Internet connections.
The decision process will run through July, with hearings slated in late May; Jortner and Black have requested the PUC hold public-testimony sessions around the state before making a final decision.
FairPoint’s request to use USF money for landline service runs counter to a current trend in telecommunications regulation: Federal USF money is now being transitioned away from subsidizing rural and high-cost phone service, in favor of expanding high-speed Internet access throughout the country. (Compared to other developed, tech-savvy countries, the US has significantly slower Internet speed at substantially higher costs, according to regular annual surveys by international Internet backbone giant Akamai.)
The state USF money is managed separately, Jortner says, with no such obligation to invest in future technology over dwindling legacy services.
Public comments to the Maine Public Utilities Commission are welcome at all times, via or by mail to 18 State House Station, Augusta ME 04333. This request is in docket 2013-00340.